Good day and welcome to KBR's Fourth Quarter and Fiscal Year 2015 Earnings Conference Call. This call is being recorded. As a reminder, your lines will be in a listen-only mode for the duration of the call. There will be a question-and-answer session immediately following prepared remarks. You will receive instructions at that time. For opening remarks and introductions, I would like to turn the call over to Mr. Zac Nagle, Vice President of Investor Relations. Please go ahead. Zachary A. Nagle - Vice President-Investor Relations & Communications: Good morning and thank you for joining us for KBR's fourth quarter and fiscal 2015 earnings conference call. Today's call is also being webcast and a replay will be available on KBR's website for seven days at kbr.com. The press release announcing KBR's results is also available on KBR's website. Joining me today are Stuart Bradie, President and Chief Executive Officer; and Brian Ferraioli, Executive Vice President and Chief Financial Officer. During today's call, Stuart and Brian will cover KBR's financial and operation results in more detail, provide an update on our progress against our strategic objectives, and discuss our market outlook. Please refer to the accompanying presentation that is posted on our website at kbr.com. After our prepared remarks, we'll open the floor for questions. Before turning the call over to Stuart, I would like to remind our audience that today's comments may include forward-looking statements reflecting KBR's views about future events and their potential impact on performance. These matters involve risks and uncertainties that could impact operations and financial results and cause our actual results to differ significantly from our forward-looking statements. These risks are discussed in KBR's fourth quarter earnings press release, KBR's earnings presentation, KBR's Form 10-K for the period ended December 31, 2015 and KBR's current reports…

Thank you. Our first question comes from Tahira Afzal.

Hi, folks. Congratulations on a good quarter. Stuart Bradie - President & Chief Executive Officer & Group President-Engineering & Construction: Thanks, Tahira. Brian K. Ferraioli - Chief Financial Officer & Executive Vice President: Thank you. Good morning.

Good morning. So, first of all thank you for setting some qualitative expectations for 2017, which seem pretty grounded. I assume at these levels it will help your stock. If I was to look at the government side of the business, could you give us more of an idea of some of the backlog opportunities you have – left over there, if there's still some large ones on the UK side? And then number two, the U.S. side, obviously we are seeing an uptick in some of the spending, at least for this year. Are you seeing anything of the same size and scope as the opportunities in the UK? Stuart Bradie - President & Chief Executive Officer & Group President-Engineering & Construction: We're not clear about the opportunities in the UK you're referring to, Tahira. Brian K. Ferraioli - Chief Financial Officer & Executive Vice President: You cut out a bit. So I'm sorry, we didn't hear the beginning of your question.

Yeah, sorry. I know you've just won a very large UK opportunity. But I'm wondering if there are some other lumpy large ones out there that you can highlight a little more. And whether there are any similar ones now in the U.S. with the spending here potentially picking up. Stuart Bradie - President & Chief Executive Officer & Group President-Engineering & Construction: This is in the Government Services side of the business.

That's correct. Stuart Bradie - President & Chief Executive Officer & Group President-Engineering & Construction: Yes. So I think we've talked before about Army 2020, which is really the UK government bringing the rest of the UK army back to the UK mainland from Germany. And that continues to progress well. We're in single-source negotiations with the Ministry of Defense to achieve that goal. As you know, we sort of built the facilities in the Salisbury Plain for the UK army and we maintain them for the next 20-odd years. This will be an additive, reasonably-sized construction portion to this. And then the maintenance portion will increase (29:10) current contract. So I think a really, really sizable opportunity for us, and one that we will drive to conclusion through the course of 2016. Probably mid-year, sort of late Q2, maybe into Q3, depending on if we can get all the contract terms sorted out with the government. But that's progressing very well and that's a sizable opportunity. And in terms of the U.S. side of the business, we're tendering a number of sizable base contracts today. The timing of award will happen, we believe, through 2016, but it's difficult to determine the exact timing just because it's a government process. We haven't really called out those as specific opportunities because there's a number of them. And if we get our fair share, I think we'll see some good growth in that side of the business.

Got it. Okay. And Stuart, in regards to your qualitative commentary around 2017, being a tougher year and how that plays out for you, would that be partly dependent on obviously Magnolia going ahead and being awarded for construction by the early part of next year? And is Tangguh just as important? Is it a less tough year if you end up getting at least one or both of those? Stuart Bradie - President & Chief Executive Officer & Group President-Engineering & Construction: I think from a – I think both are very different scales. I would say that first. I think Tangguh is far smaller in scale than Magnolia. I think that the – for us neither of those opportunities are in backlog today. None of them – we would not do that until they reach financial close, it's worth calling that out. That's really our policy and we'll stick by it. It would be terrific if Magnolia – I mean, the client is confident that they're at the right end of the cost curve. They're still, in a dollars per ton perspective, at the very lower end of that. So they feel that as they progress through 2016, the opportunity for LNG sales, they believe, will be good. So in terms of looking into 2017, I don't think either of those opportunities for us are – we don't need either of them to actually deliver on our strategy of where we're heading. Obviously, if one or both were successful, that would make life a little bit easier, of course it would. But I don't think them going ahead or not going ahead or being successful will detract from where we're heading.

Thank you very much, Stuart.

And we'll move forward to our next question from Rob Norfleet.

Good morning and congratulations on a nice end to the year. Stuart Bradie - President & Chief Executive Officer & Group President-Engineering & Construction: Thanks you very much. Brian K. Ferraioli - Chief Financial Officer & Executive Vice President: Thanks, Rob.

Just a quick question. I guess we always get into the question of guidance within guidance, but when I look at the range of the guidance, and Brian, I think you did a nice job of kind of pointing out what some of the non-operational items were that impacted results in 2015, so we can kind of look at on an apples-to-apples basis. But there is a fairly wide gap at the bottom end of $1.20, which would imply, on an adjusted basis, modestly down earnings. And I know you guys have pointed out, obviously, some of the difficulties in the market. But could you maybe point out just in terms of the low-end versus high-end kind of what – from a bottoms-up perspective you guys, what would have to happen for kind of the lower end versus the bottom end to happen? Is it more that a project like Magnolia does not come to FID or is it just more CapEx cuts and the inability to win some of the larger projects that we've discussed? I'm just trying to get a general understanding of the range. Brian K. Ferraioli - Chief Financial Officer & Executive Vice President: Well, Rob, again, if you look at the range, we don't think it's so far off to where we are for this year. If anything maybe it's a – we have a good opportunity for to be up slightly in a pretty challenging market, but it's a challenging market. So, we'll see how things play out, but to answer your specific question about Magnolia, Magnolia is unlikely to proceed. The last we had heard from the client publicly was delayed until the end of the year. So, it would have no impact on this year.

Okay. So, within that contract, given that you have a – obviously you've guaranteed a fixed price EPC contract, would you likely extend that or how do you work with the customer in that regard? Stuart Bradie - President & Chief Executive Officer & Group President-Engineering & Construction: Yes, I mean, you're right. We would look to extend that as we – within the realms of reasonableness as the year progresses.

Okay. And just my question just involves around obviously we have two of the larger LNG projects that are pretty heavy contributors to the E&C segment this year. Can you kind of talk about the contribution this year and really the roll down of these contracts as we enter the second half of 2016, and what if any contribution there will be in 2017? Stuart Bradie - President & Chief Executive Officer & Group President-Engineering & Construction: So, I think we've been pretty clear about the fact that our LNG earnings in 2016 would be similar to 2015 and I think we will continue with that. The two projects are at different stages of, I guess, their cycle with Gorgon looking to produce hydrocarbon very soon and first LNG there. So that project will run down through the course of the year, while the excess project will continue and running through the construction cycle in 2016 on into 2017.

Okay. Great. And just lastly, in terms of – Brian, can you just give us in terms of cash – the amount of cash that U.S. versus international and again how that potentially impacts the capital allocation decisions in 2016? Brian K. Ferraioli - Chief Financial Officer & Executive Vice President: We have what about $300 million. It's in the 10-K, there's a chart, let's see if I can find it quickly. But in terms of capital allocation, it's at $336 million, I am told domestically and... Stuart Bradie - President & Chief Executive Officer & Group President-Engineering & Construction: It's page 36. Brian K. Ferraioli - Chief Financial Officer & Executive Vice President: Oh, page 36 I'm told, but it's about $300 million or so. Stuart Bradie - President & Chief Executive Officer & Group President-Engineering & Construction: (35:44) Brian K. Ferraioli - Chief Financial Officer & Executive Vice President: Yeah, $360 million. And in terms of capital allocation, no, it doesn't have a significant impact where the cash is located. We're looking at opportunities on the M&A side on a global basis. Clearly on the buybacks and dividends, that's more of a domestic cash issue, but we have some fair flexibility about how we can move cash around in a tax efficient manner right now. So, the split between the two is not a huge issue in term of capital allocation.

Great. Well, thanks for the time and congratulation again on a good year in a difficult environment. Stuart Bradie - President & Chief Executive Officer & Group President-Engineering & Construction: Thank you very much. Brian K. Ferraioli - Chief Financial Officer & Executive Vice President: Thank you.

And we'll move forward to our next question from Jamie Cook. Jamie L. Cook - Credit Suisse Securities (USA) LLC (Broker): Hi. Good morning, can you hear me? Brian K. Ferraioli - Chief Financial Officer & Executive Vice President: Yes. Good morning, Jamie. Stuart Bradie - President & Chief Executive Officer & Group President-Engineering & Construction: Yes. Good morning, Jamie. Jamie L. Cook - Credit Suisse Securities (USA) LLC (Broker): Good morning, everyone. So, a couple of questions, Brian. If I could just press you a little more on how to think about 2016 and 2017. One, is there anything unusual or how do we think about the cadence of earnings in 2016 first half versus second half? Because obviously that is implications for how we think about 2017 and just with roll off on the LNG projects. And, Brian, your stock is trading like your E&C earnings in 2017 are going to get cut by 60% or 70%. I'm just – any color you can give if Magnolia is not going to contribute this year or contribute in 2016. If we don't get Tangguh, how bad could E&C be? And then the other – my other question, I guess, would be back on the cash flow side while the market is very negative on, I think, your earnings outlook beyond 2017, I still feel like on the cash side, people under appreciate sort of the opportunities for you to produce cash flow above your net income level. So, can you talk about as we think about a resort over the next 12 months to 8 months, are there any one-time things that could significantly improve your free cash flow above net income and how you think about share repo versus deals given the free cash flow pipeline? Thanks. Brian…

And we'll move forward to our next question from Andrew Kaplowitz.

Good morning, guys. Stuart Bradie - President & Chief Executive Officer & Group President-Engineering & Construction: Hi, Andy.

Nice quarter. How are you doing? So, Stuart, maybe you can talk a little bit more about the progress of restructuring that you've made. We noticed – I think you changed your wording in the press release, from guidance of $200 million to at least $200 million this quarter. So, how do we think about additional opportunities for KBR to take out costs, and when and where can you do it? And then just following on to that, also how do we think about the lower cost falling to the bottom line given pricing pressure out in the E&C environment right now? Stuart Bradie - President & Chief Executive Officer & Group President-Engineering & Construction: Yeah. I mean, I think what we found through the cost reduction exercise is that you always attack the, I guess, the lower hanging fruit first. But I think as I've explained often on the road, the beauty of what has happened, I think, within KBR is the passion from the people and we're getting a lot of the ideas and the feedback up through the business rather than from the top down. And so, the ability for those cost savings to stick is far greater. And as a consequence of that, we're actually seeing greater opportunity to take cost, continual cost out of the business as we go forward. I think second, the stall-out of $200 million in 2016 is really the target. We do think there may well be opportunities beyond that but, I think, anyone who understands our business understands one of the things in a down market that you have to actually manage is your LCA or your non-chargeable time. And we've been very transparent, a dollar of cost out of the business is a true dollar of cost. It's not we take a dollar out here and something happens over there and it goes up, but that's not – we don't count it. We've actually – we count everything. And so we need to manage our non-chargeable time and maintain capability through this period. And I think that setting our stall out the way we've done it is appropriate, but I do think there are opportunities for even more efficiency through the business. And that's why we've actually made the statement at least $200 million.

Okay. That's helpful. And then you kind of talked about a lot of potential growth in Government Services. I think you know this. You did about $60 million in profits, excluding legal fees in the year, in 2015. If you look at KBR historically outside of LogCAP, it's been difficult for KBR to grow Government Services. And it does seem like you have more opportunities than you had in the past. And maybe still you can talk about how do we think about actual growth in this business going forward because, I do think, it's key to offsetting some of the hydrocarbon stuff, but it's been a struggle to grow that business ex-LogCAP in the past? Stuart Bradie - President & Chief Executive Officer & Group President-Engineering & Construction: I think, yeah, it's difficult to talk for the past because I wasn't really here. I would say it was – I mean, you'd think running a contract like LogCAP III was pretty all-consuming. But that aside, we're now in a very different phase of development on Government Services. We know strategically where we want to go. We really understand the markets we're in. We know the competitive landscape and we know our positioning. And we know exactly where we want to invest and how we want to differentiate or the areas we want to move into to differentiate that business. I think there's significant opportunity to grow it organically. I think there are some opportunities to grow acquisitively. And I think as we move though the course of 2016, I think you'll start to see that. In addition, I think the strategic opportunities that we are pursuing in the UK, and in the U.S. for that matter, but I guess near term in the UK are starting to come through, and these are really solid long-term annuity-type opportunities that will really set us sort of, I guess, our earnings platform in a very consistent manner going forward.

And we'll move forward to our next question from Steven Fisher.

Thanks. Good morning. Stuart Bradie - President & Chief Executive Officer & Group President-Engineering & Construction: Morning. Brian K. Ferraioli - Chief Financial Officer & Executive Vice President: Hi, Steve.

I want to come back to the 2016 guidance again, if you could just give us a little more color on what you assume in there, to follow up on Rob's question before. I know, Brian, you listed the things that you don't really count for 2015. I guess, what are some of those things that you may or may not have in 2016? It sounds like, I think what you told Rob was that the change orders you feel pretty good about, but what about some of these other things that you may or may not have in there for 2016? Brian K. Ferraioli - Chief Financial Officer & Executive Vice President: Well, we don't have the similar sorts of items that you see on slide eight baked into the guidance, so asset impairments or severance costs or things like that, if that's your question.

No, it's more along the lines of the non-strategic recoveries on the power projects. I mean, maybe there could be some more things that are added in there. Brian K. Ferraioli - Chief Financial Officer & Executive Vice President: Okay. No. I mean, clearly, we're hopeful that we can improve on the power project performance. But we have not assumed that in the guidance. You look at the slide eight, and those are the type items that, should they occur, we back them out when we're looking at the underlying business.

Okay. And then, again, just to follow up on Jamie's question and just, again, to harp on 2017 a little bit, it sounds like your message is that you have enough small to mid-sized type projects to really kind of keep 2017 from falling off a cliff, which is really what the investor concern is. Is that the message that it's the small to medium-sized stuff that that itself can do it or you still need some of these other technology and downstream and chemical projects elsewhere? Stuart Bradie - President & Chief Executive Officer & Group President-Engineering & Construction: I think it's across it, Steve. I think part of it is the message around the smaller projects and not all consuming large projects will make us fall off the cliff. But as I said before, we think that there's an element of counter-cyclicality around our growth in Technology and our opportunity in Government Services, combined with our optionality around the balance sheet. Brian K. Ferraioli - Chief Financial Officer & Executive Vice President: And the cost reduction. Stuart Bradie - President & Chief Executive Officer & Group President-Engineering & Construction: And, of course, the cost reduction. So we've said all along that we are very focused on growing the bottom line.

And we'll move forward to our next question from Jerry Revich. Jerry Revich - Goldman Sachs & Co.: Hi. Good morning, everyone. Stuart Bradie - President & Chief Executive Officer & Group President-Engineering & Construction: Hi, Jerry. Jerry Revich - Goldman Sachs & Co.: Stuart, I'm wondering if you could just flesh out for us your broad range of expectations for orders in 2016 or prospects, however you can frame it, and maybe give us the major buckets within that, what proportion of your orders do you expect to be driven by these mid-sized projects? And you spoke about refining opportunities, maybe flesh that out for us as well in terms of whether that's brownfield or greenfield, any additional color would be helpful. Stuart Bradie - President & Chief Executive Officer & Group President-Engineering & Construction: I mean, I don't think we've – Jerry, in the past – and I don't think it's probably right that we give specific sector data like that. We do think there's growth opportunities in the Technology side. We do think – we've called out one or two opportunities in the Government Services side that have been there through 2015 that we'll continue to report on into 2016. So I think that's pretty clear. I think the key on the Government Services side is to look at the growth, the demand growth, the market growth, and where KBR sits in that environment. So that's probably easier. In terms of the color around the E&C and specific opportunities, I think, again, if you went back and looked at our announcements through 2015 in the larger projects and look at our performance through the year, I'll give you a sort of flavor. I don't have the exact percentage and I don't want to quote one that's wrong.…

And we'll move forward to our next question from Bill Newby. William Newby - D. A. Davidson & Co.: Good morning, guys. Bill Newby on for John Rogers. Stuart Bradie - President & Chief Executive Officer & Group President-Engineering & Construction: Morning. Brian K. Ferraioli - Chief Financial Officer & Executive Vice President: Morning. William Newby - D. A. Davidson & Co.: I was hoping to just get some more color around the acquisition pipeline that you guys see in the near term. I think you mentioned some bolt-on acquisitions that you're seeing here in 2016. But any more color there would be good. Stuart Bradie - President & Chief Executive Officer & Group President-Engineering & Construction: Yeah. I think we've said all along that, acquisitively, we would only do it if there was synergy on the revenue side. We wouldn't do something purely for a cost synergistic benefit. We want one plus one is greater than two. And we've called out, I think, in our 2016 scorecard, I guess, the three areas. They excite us at the moment. The first is, again, broadening the technology portfolio; A, because it's a great business in its own right. We'll have a bit of a – if we could do that with a recurring revenue around solvent sales or catalyst sales, that's terrific. But also position us for the EPC opportunities going forward, of which we can be a little bit more selective and get in early and be a little bit more differentiated, which in this marketplace will really help. In terms of the other area we are keen on, it's broadening the Industrial Services model in the U.S. and globally. We do think that there'll be a lot more work in this area as people try to get more out of the existing assets, and with a lack of CapEx that, I think, the last down cycle demonstrated that that was actually the case. And I guess, the third but certainly not the least is the Government Services business with an increasing demand, the opportunity for us to broadening our service offering there and get into areas of differentiation is in front of us. So, I think that we've tried to be pretty clear about our strategic priorities for 2016. And we will only do acquisitions if it fits our strategy and we'll only do it if it's synergistic in our revenue base. William Newby - D. A. Davidson & Co.: All right. Thanks. Appreciate it.

And we'll move forward to our next question from Vishal Shah.

Hi. This is Rakesh on for Vishal. Thanks for taking my question. So, with the increased focus on bidding around maintenance and around work, can you maybe talk about the pricing levels that you have seen and the competition that is present in the segment? Stuart Bradie - President & Chief Executive Officer & Group President-Engineering & Construction: I mean, I think it's worth saying that the contracts that you enter into, particularly in the maintenance side of the business are typically long term. I guess the margin guidance we've given within E&C, we stick by. The typically once you get the invoicing and the administration sorted out, the cash performance is typically good. So, I think all of that plays to being an attractive business. Certainly, the risk profile, they tend to be far more cost reimbursable than lump sum also, which helps the cyclicality of performance.

That's helpful. Thanks. Stuart Bradie - President & Chief Executive Officer & Group President-Engineering & Construction: Okay. I think we're done?

And that concludes today's question-and-answer session. I'd now like to turn the conference over to Stuart Bradie for any additional or closing remarks. Stuart Bradie - President & Chief Executive Officer & Group President-Engineering & Construction: As ever, thank you very much for taking the time to listen this morning. We've tried to give us a little bit more flavor and color around how we've progressed through the year and resolving some of the legacy disputes. I think the team has done a fantastic job really de-risking the business from where it was 12 months to 18 months ago. And I think we've got a – it's difficult times in the hydrocarbons market, less so in the Government Services side of the business. So, I think there's a good balance to what we're looking at in front of us. And certainly I'm very proud of the performance we've done not only in safety, but also in cash management through the course of the year which gives us great optionality. So, thank you again for listening. And obviously, happy to take any follow-up calls or questions through the course of the – for the next little while and the year for that matter. So, thank you.

And that concludes today conference call. We thank you for your participation.